Oil marketing companies (OMCs) have suffered a cumulative loss of Rs. 5,722 crore during last eight years on special oil bonds as they had to be disposed off these bonds at a discount. Special oil bonds were issued as compensation in lieu of the part of the under-realisations incurred by them during 2005-06 to 2008-09. Though OMCs were demanding SLR status for these bonds, government never granted the same due to various reasons as a result of which they have not found much favour in the banking circles. Also due to continuous borrowing programme of the government and large supply of oil bonds, OMCs had to liquidate these bonds at much higher discount thereby suffering huge loss. Unlike under recoveries, these losses are not reimbursed by the government and had to be borne by the OMCs themselves.
OMCs’ under recoveries on diesel, PDS kerosene and domestic LPG continued to remain high during the first half of the current financial year. OMCs have reported a total of Rs 60,907 crore as under-recoveries during the April-September 2013-14 period. The total under-recoveries in the last fiscal 2012-13 were estimated at Rs 1,61,029 crore, which is significantly higher than the under-recoveries of Rs. 1,38,541 crore reported during 2011-12. The total under-recoveries in 2010-11, stood at Rs 78,190 crore.